After net neutrality loss, US ISPs get ready to take case to Supreme Court

FCC won in all facets of today's decision, but ISPs are not out of options.

Today's court decision upholding net neutrality rules is a huge legal milestone for the Federal Communications Commission's attempt to more strictly regulate Internet service providers. But as you might expect, the fight is not over, and it could end up being decided by the Supreme Court.

The FCC won a 2-1 decision (full text) from a three-judge panel at the US Court of Appeals for the District of Columbia Circuit, as judges rejected challenges to the FCC's reclassification of broadband as a Title II common carrier service and imposition of net neutrality rules. But ISPs and their lobby groups are not out of legal options: they can ask the same court for an "en banc" review in front of all of the court's judges instead of just a three-judge panel. If that fails, they could appeal to the Supreme Court, or they could skip the en banc step and go straight to the nation's highest court.

Further Reading

The Supreme Court can pick and choose what cases it wants to hear, so there's no guarantee ISPs would even get in front of the justices. Law professors interviewed by Bloomberg said chances of a high court review are so slim that ISPs would be best served by asking for an en banc review first. The fact that it was a 2-1 decision instead of 3-0 may increase the chances of an en banc review, but there's no reliable way to predict how it will turn out.

Even if ISPs take the interim step of seeking an en banc review, AT&T does not expect it to be the last phase of the battle. “We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal," AT&T general counsel David McAfee said.

The American Cable Association (ACA), which represents small and medium-sized cable companies, also issued a statement saying it intends to appeal.

"ACA is disappointed that the DC Circuit supported the FCC's decision to regulate the complex, computer-like networks of ISPs as though they are 'dumb' pipes provided by monopoly telephone companies," ACA CEO Matthew Polka said. "ACA continues to believe that the FCC acted contrary to law and decades of precedent in relying on Title II of the Communications Act as the legal basis for its new regulations, whose burdens fall disproportionately upon smaller ISPs. Although ACA needs time to review the Court's ruling to assess the need for further litigation, ACA expects to seek review of the decision."

USTelecom, which represents phone companies like AT&T and Verizon, said it plans to "evaluat[e] all of our legal options." Similar statements about evaluating legal options came from the National Cable & Telecommunications Association (NCTA) and CTIA—The Wireless Association.

You can thank—or blame—Verizon for strict net neutrality rules

Broadband providers wouldn't be in this position if not for Verizon. Under previous leadership, the FCC passed much weaker net neutrality rules that did not involve reclassification of Internet providers as common carriers. Verizon sued to overturn those rules despite most other ISPs deciding that they weren't worth fighting in court over.

Verizon "won" that case in January 2014, but the decision (also from the DC Circuit) laid the groundwork for the FCC to impose the strict rules it ended up voting on last year. That's because the court's 2014 decision said the FCC erred by imposing per se common carrier obligations without first reclassifying broadband providers as common carriers. After that decision, the FCC could either impose weaker rules and keep the ISPs classified in the same way or reclassify them and impose stronger net neutrality rules.

Although the FCC did not impose some of the strictest common carrier rules such as rate regulation and tariffing, ISPs have seen the reclassification as being close to a worst-case scenario. In addition to rules forbidding blocking, throttling, and paid prioritization, the rules give the FCC oversight over interconnection payment disputes and practices such as zero-rating (which provides data cap exemptions to certain online services, sometimes in exchange for payment). Because of Title II's "unjust and unreasonable" standard, consumers can also file complaints against ISPs alleging that prices are too high.

Further Reading

Despite the certainty of additional legal action, the FCC's Democratic majority rejoiced after today's decision. We quoted Chairman Tom Wheeler's reaction in our initial story, and Commissioner Mignon Clyburn has since issued a statement. Clyburn said she is "particularly pleased that the court upheld protections for mobile consumers, something for which I fought mightily during the lead-up to the Commission’s vote last year." Consumers should have the same protections whether they're using their home Internet service or mobile broadband, she said.

Republican FCC Commissioner Michael O'Rielly, who voted against the FCC's net neutrality order, said he hopes the court decision will be overturned.

“The DC Circuit’s decision is more than disappointing, but I expect it to be appealed to the US Supreme Court so this opinion is not necessarily the final say," O'Rielly said. "If allowed to stand, however, today’s decision will be extremely detrimental to the future of the Internet and all consumers and businesses that use it. We all will rue the day the Commission was confirmed to have nearly unmitigated power over the Internet—and all based on unsubstantiated, imaginary 'harms.'"

While Republicans in Congress have made various unsuccessful attempts to roll back the FCC's net neutrality rules, Congressional Democrats hailed today's decision. “The court decision affirms what we already know to be true: that the FCC has the power to classify broadband Internet access service according to its best and current understanding of the technology, and how consumers harness that technology," said Sen. Edward Markey (D-Mass.). "The battle for net neutrality is the battle for our online future, and today’s ruling is a victory for consumers, innovators, entrepreneurs, and anyone who counts on the Internet to connect to the world."

“The FCC’s decision last year to adopt new net neutrality protections was the culmination of years of hard work by lots of Americans who believe, just as I do, that the Internet should remain the free and open platform that it’s always been," Sen. Al Franken (D-Minn.) said. "It is critical to our democracy and our economy that it continue to operate this way. And I will keep fighting to make sure everyone understands what’s at stake, why we need to stand by the strong rules adopted by the FCC, and work to ensure all content is treated equally.”